Some [market Luddites] have questioned that high is a relative, not an absolute.
High compared to where it has been in the past?
But money is not made in the past.
It is only made in the present [through dividends] and in the future through capital appreciation, so the question of high becomes:
Is it high compared to where it will be in the future?
Proof of concept has been obtained!
Silver Wheaton SLW was deemed "too high to buy" Aug 26th as it broke out [above $22], to a new yearly and all time high:
fabian Share Thursday, August 26, 2010 10:38:22 AM
Re: fabian post# 658780 Post # of 664684
"SLW--and there it is...all time high but still well down from its likely high over the next 2 years.
High is relative...
to the past but also the future
No temptation to sell here.
SLW is one that IS STILL A BUY, then add on pullbacks as every year so far it has had many.
...although...there is no overhead resistance.
Everyone who ever bought and held has a profit, so no underwater holders waiting to sell when they break even".
F
Babycakes took the bait:
babycakes Thursday, August 26, 2010 11:56:04 AM
Re: fabian post# 658831 Post # of 664684
"SLW....nibbled some at 22.44"
SLW, barely two months later is now $37.09 up 68% from the $22 breakout.
Obviously time has altered the perspective as to SLW being high or too high at $22
Same applies to low.
The market has a nasty habit of inventing far lower lows in the future when a stock is currently at a "Low"
People have a natural tendency to use history as a reference point as it serves one well in most things in life. History has been accomplished, it is crystal clear, so tempting to use.
When it comes to the stock market, history of prices may lead one to it's "high or low", as that is clear looking backward, but it also can and often does cause one to come to the wrong conclusions and a lot of missed opportunities [or getting into dogs because they are "Low"
Still disbelievers?
NFLX was really "high" in late Aug. $120/share. [We remember when NFLX was in the $20s's].
NFLX is currently crossing the tape at $201.60
No "Ya But's"....
Don't you even dare! LOL
Fabian
"Ya But...What if it goes down after buying high and expecting higher??"
Who said that???
What if it goes down after buying high, what do you do??
Same thing as if you thought you were buying low and it goes lower.
Stops.
P.S. There is another lesson here. An antidote to the addage "it never hurts to take profits".
Tell that to those who sold SLW at $22 at an all time high barely 9 weeks ago. 67% higher now and still rolling with no sign that profits should be taken yet.
Few stocks we buy will be big winners no matter how good we are or how much we try. It is imperitive to try to listen to the market saying which that we have bought are winners and possibly huge long term winners, so we can add to them or at least not prematuerly sell. It's that one or two out of ten that make over 50% of the long term acct profits....but not if the position is subject to an arbitrary "never hurts to take profits" mantra.
History IS a good guide when it comes to proven principles.
Two of the core one's are of course:
Let winners run,
Cut losers.
Fabian
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